How Fast Can a Commercial Hard Money Loan Close?
When it comes to financing your commercial real estate ventures, timing is often of the essence. Unlike traditional lenders, commercial hard money lenders offer a faster and more streamlined loan process, allowing investors to seize opportunities without delay. But just how fast can a commercial hard money loan close? Let’s break down the main factors influencing the timing of a hard money loan and explore the journey from application to closing.
Commercial Hard-Money Underwriting Timing Factors
Application Approval and Underwriting
2 to 3 business days
The journey begins with submitting your loan application and the requisite documentation. Once received, the lender’s underwriting team will assess your application and review your financials, credit history, and property details. The speed of this process can vary depending on the lender’s workload and efficiency, but typically, it takes a few days to a week to receive initial approval.
Issuance of Term Sheet or Letter of Intent (LOI)
Three Business days after the full file is submitted: Upon approval, the lender will issue a term sheet or Letter of Intent (LOI) outlining the approved loan terms. This document is a preliminary agreement between you and the lender detailing the loan amount, interest rate, repayment terms, and any other pertinent conditions. The next steps can commence once you accept the terms and agree to move forward.
Appraisal Process
7 to 10 business days: Before finalizing the loan, the lender may require an appraisal of the property to determine its market value. You may also be asked to pay upfront fees, which typically cover appraisal costs and other administrative expenses. Once the appraisal value comes in and the upfront fees are paid, the lender can finalize the loan terms.
Closing Preparation
The lender will begin preparing for closing with confirmed appraisal value and upfront fees paid. This involves opening title, obtaining necessary insurance, and ensuring all entity documents are in order. The efficiency of this process depends on factors such as title company responsiveness and coordination between parties involved.
Loan Closing
14 to 21 days to close! Finally, it’s time to close your loan and proceed with your real estate plans. You’ll sign the necessary documents at the closing table, and funds will be disbursed accordingly. Whether you’re acquiring a new property or tapping into existing equity, the closing marks the culmination of the loan process and the beginning of your investment journey.
Rinse and Repeat
As you embark on subsequent real estate ventures, the loan process becomes more routine and less complex. With each successful transaction, you’ll gain experience and confidence, streamlining the process further and accelerating your path to building your real estate empire.
Conclusion: Seizing Opportunities with Speed and Efficiency
In the realm of commercial real estate investing, timing can often make or break a deal. With commercial hard money loans, investors can capitalize on opportunities swiftly and efficiently, thanks to a streamlined loan process and expedited closing timelines. By understanding the main factors influencing loan timing and working with experienced lenders, investors can navigate the loan process with confidence and seize opportunities with speed and efficiency.